SEQ property delivers record house prices

Property Market,  Buyers and sellers,  Principals

A solidly performing southeast corner property market beat predictions of doom and gloom as Brisbane, the Sunshine Coast and the Gold Coast all posted record annual median house prices in the September quarter of the REIQ Queensland Market Monitor report.

The Brisbane annual median house price grew 2.3 per cent to a new high of $675,000. The Gold Coast median grew 3.8 per cent to $629,000 and the Sunshine Coast SD (which includes Sunshine Coast LGA and Noosa Shire) delivered a stunning 6.3 per cent growth to a new high of $595,000.

REIQ CEO Antonia Mercorella says the strength of growth proved that Queensland real estate was a good investment and could be relied upon to deliver capital growth.

“While other markets around the country are struggling in the face of tightened lending criteria and cooling investor appetite, the southeast corner of Queensland continues to deliver steady, sustainable growth,” says Mercorella

“Queensland’s economy is proving itself to be a good performer, against a backdrop of national gloom, with new jobs bringing population growth and demand for housing,

“The southeast corner is our powerhouse, without a doubt, but additionally we’re seeing strong results in regions that have been struggling.

“The resources sector is improving and we’re seeing regions such as Mackay and areas of western Queensland firmly in recovery.”

The unit market has not fared so well and has delivered largely softer results across the state as this product battles against oversupply issues.

Brisbane LGA annual median unit price fell 2.2 per cent to $440,000. This market is now only 5.5 per cent stronger than it was five years ago.

The Gold Coast unit market, which is the biggest unit market in the state with more than 10,000 sales per year, fell 1.6 per cent to an annual median unit price of $425,000.

“This is the first time we’ve been clear in the post-Commonwealth Game period and it’s encouraging to see that the market is bubbling along. The house market has delivered good growth and the unit market is still absorbing some small oversupply, but on the whole we remaining optimistic for this market,” says Mercorella.

The Sunshine Coast SD bucked the trend, adding 3.1 per cent to the annual median unit price, to reach $430,000.

Within the Sunshine Coast SD market, Noosa has stolen the spotlight as our strongest performing house and unit market for the 12 months to September 2018. The Noosa median house price grew 8.7 per cent to a stunning $715,000. The median unit price grew a breathtaking 12.2 per cent to a new record price of $550,000.

“This market has roared up to the top of the table and completely smashed the growth trends,” says Mercorella.

“The demand for living in Noosa, either in a house or unit, seems to be almost insatiable.”

Regional markets

The Toowoomba annual median house price grew 0.6 per cent to $352,000. This region has experienced extensive solid growth for a sustained period, however, it seems to be levelling off and growth is slowing.

The Toowoomba unit market has consistently defied contraction trends while major infrastructure projects have been underway and this market continues to hold its own. While the annual median unit price didn’t grow, neither did it fall.

The Fraser Coast median house price has grown 1.1 per cent over the year to September 2018 to $318,600. This growth is modest, but is part of a broader trend of small, sustainable growth.

The Fraser Coast unit price eased slightly by 1.2 per cent to $250,000.

The Bundaberg median house price has also held its own against some regional headwinds. The year-to-September 2018 median house price is the same as a year ago, $285,000. With the Wide Bay SA4 unemployment level of 8.8 per cent and a low employment participation rate of 50.9 per cent, according to Census data, the housing market is likely to struggle for strong growth.

The Gladstone median house price fell significantly again, confirming our view that this market is still working to find a new normal in the post-resources boom period. The 8.1 per cent contraction in the house price, to $266,500, is likely a symptom of the considerable mortgagee-in-possession sales in the region, which are serving to keep prices depressed.

The Rockhampton median house price eased just 0.8 per cent in the 12 months to September 2018, to $265,000. We know there are good underlying economic factors supporting this region and it is our belief that we are starting to see some price stabilisation. The pace of losses has slowed and the rental market has tightened considerably, to a tight 2.3 per cent. This is a good indicator that sales will follow and demand will rise, exerting upward pressure on prices.

Mackay is facing a stunning return to positive growth with 5.6 per cent growth in the annual median house price and 1.3 per cent growth in the unit market. This region has the lowest unemployment in the state, at 3.3 per cent and a participation rate of 74.3 per cent. The population is growing as jobs attract workers back to this region and the rental market is one of the tightest in the state with just 0.9 per cent vacancy.

This market is still underwater, about 19.7 per cent below levels of five years ago, when the median sale price was $423,250. It is uncertain if the current growth rate can be sustained to pre-2013 levels, but we are confident this growth continue for the moment.

Whitsunday LGA blasted back with 10.8 per cent growth in the 12 months to September 2018. This market now posts an annual median house price of $360,000.

The Townsville market contracted 4.5 per cent over the year to September 2018, which is somewhat surprising given the population growth and the falling rental vacancy rate which has reached 3.9 per cent. However, unemployment in Townsville SA4 remains above 9 per cent, which is challenging for housing market growth.

The Cairns market has historically been an outlier in regional Queensland housing market trends, posting consistent growth in recent years when all other markets north of the Sunshine Coast have contracted.

However, it looks as though this market may be stabilising with a contraction of the annual median house price of 1.2 per cent to $405,000. The market is delivering pockets of growth in good suburbs, but it’s a matter for buyers to spot those suburbs carefully.